I have a tenant in a rental who is a fairly good tenant but has had trouble with rent a few times. They have always gotten caught up within a week or maybe two at most, and I have been charging late fees and giving them more and more flak for it.
The house is one I am underwater on (fomer primary residence) in a small town without a lot of opportunities and high vacancy. They keep the place very clean and take care of it. They are not complainers either.
The tenant called me a while ago and said that he has a lot of bills all at the first of the month and was confident that he could be reliable if the due date were on the 15th instead of the first. This is the fist month since the agreement and they were right on time. I need to renew the lease soon and have ben trying to decide whether I want to do it or not. I have a full months security deposit, but hate using it as collateral to give them credit for two weeks rent.
I considered telling them to just do it two weeks early, but I fear that they will just fall into the same old habit we’ve had.
This guy has a month problem not a date problem. I have changed dates on tenant before and it always has problems. If you do change it always change to make him pay more. In other words he pays you $1000 May first. On May 15th he pays $1000 and then each 15th of the month he pays you $1000. If he complains about the extra $500 him it is a fee to change the date. If he can’t do that then the date is not the problem. If it was the date he would have the extra money on that date from last month. Never change it so he gives you $500 for ½ month. Remember rent is paid in advance so he would have to pay for the time of the change.
The problem is your tennant can’t budget their money.
They don’t have the ability to save that mid-month paycheck until the first of next month.
You and I see that, and would just fix the problem. Most tennants can’t/won’t. So give them a crutch as long as you can benifit from it.
If they can’t save their money for when they need it take it when they get it.
I had a tennant who couldn’t pay a monthly payment of 700 on time to save their life, but a twice-monthly payment of 375 was paid like clockwork.
I also have a tennant with mostly SSI income: I have a 5th of the month due date, and it works out great.
You say the tenant is a fairly good tenant. What does that mean? Are they clean? Take care of the property? It’s really your call on changing the date. I have changed the date for one of my tenants because I didn’t want to lose them. They kept the unit clean, never complained, and were good people. I decided that gettin rent later was easier then having them move out and getting another person in there. Sometimes the devil you know is better than the one you don’t.
I mean that they are clean and take care of the place. Their house stays cleaner than mine! They keep up the landscaping and keep the lawn cut and take care of minor maintenance without telling me about it at all. His lease is up soon - maybe I should have him pay me for two weeks at the end of this one and have the new one start on the 15th of the next month? That takes care of my issue with security deposits being used as “collateral” and he can start being on time with the rent without having to budget.
Sometimes I feel that I give in too much for this kind of stuff, but at the end of the day what I want is rent money without having to hassle anyone to give it to me. If all it takes is a different day to get it why do I care?
If you only have a few properties, it may not be a big deal to keep up with. Once you get a sizeable business, anything non-std will be more difficult to keep up with.
I’ve tried a couple times to make special deals for people. One lady’s due date is on the 10th and late after the 15th vs due on the 1st and late after the 5th. She’s late and pays late fees even though I moved the due date to where she wanted.
Another couple pays every other Friday when they get paid. They generally abide by that and it has worked out.
Honestly if it was my tenant I would do what I could to change the date for them. Good tenants are hard to find. I only have two buildings with five units total so I can see others mean when they say it a pain to change the date. I would rather keep the tenant that keeps my unit looking good then go through getting a different one. I like Petes idea if you could make that work.
I don’t agree with charging him a hefty penalty, you said yourself your underwater and rental opportunities in the area aren’t that good. Only thing your going to do is hurt yourself if you charge a big fee because he will simply leave and then you’ll be getting no money at all.
I read a book once, The Landlords Kit I believe, that talked about making the middle of the month payment option to your tenants. I offered it to mine but they didn’t take it, they’re very financially responsible. Like others have stated, yours clearly do not know how to manage their money, thus the reason they rent instead of own. If you are happy with how they treat the property and have no other complaints then I’d try to work something out.
My family has been small business owners for 30yrs+ and when it comes to money and people what they have taught me is this: sometimes it is worth dealing with peoples shortcomings if your satisfied with their performance and feel you can trust them.
Think about offering them the option to pay twice a month but add a SMALL fee to this, if their rent is 700 now, charge $375-$400 tops twice a month. Also, think about direct deposit options. I don’t know what kind of job he has, but I bet he’d be open to some kind of deal that helped him make his rent payments on-time and care-free.
Sometimes you just have to give a little, but the benefits are worth it.
I’ve whacked tenants with high penalties in the past hoping to get
them to change their habits and they’ve just moved out.
All in all, I’d rather rather have a long term good tenant that will pay
habitually (as long as the property cashflows) vs. collecting rent at the
first of the month.
If your property is cashflowing then I would split the payments in order
to keep the tenant installed. Given your market economics, this makes
the most sense.